Seattle Office Space News – October 2017

9/ November 2017

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of October 2017.

OFFICE DEVELOPMENTS

Construction officially began at the Rainier Square site in October, which when complete will have 722,000 square feet of office space and 58 stories leased to Amazon. The University of Washington currently ground leases the site to developer Wright Runstad for $413,000 per year until the tower is completed, and just over $1.65 million per year after completion.

Troy Block, also occupied by Amazon, formally opened this month – just days after the announcement of Amazon’s full building lease at the new Rainier Square site. The 800,000+ square foot Troy Block, combined with the 722,000 square feet at Rainier Square, is slightly larger than that of Columbia Center, Seattle’s largest office building. Speculation on whether or not Touchstone, Troy Block’s developer, will sell the building has neither been confirmed nor denied by Touchstone officials.

Skanska has poured the foundation for 2+U, its new 38-story office tower, in an endeavor that took 23 hours and 11,000 cubic yards of concrete. The foundation, which is 40,000 square feet total and 12 feet deep, includes 2.8 million pounds of reinforced steel and began pouring at 2 AM on September 30th, stretching through the day and well into the night. The tower is scheduled to be complete in Q2 of 2019.

Down on Fifth Avenue and Marion Street, Madison Centre has officially opened its doors. The gorgeous multi-tenant office tower, developed by Schnitzer West and Barings LLC, was built to recruit exceptional talent through location and amenities. Officials are tight-lipped on the cost of the building, but it’s estimated to be around $430 million. A first look at the new tower can be found here.

BUILDING SALES

Unico Properties bought World Trade Center North from an entity of TIAA for $65 million. It had previously sold for $71 million in 2007, making this newest sale 8% less than when TIAA purchased it. The five-story 133,177 square foot building is one of three built on Port of Seattle land. WTC North is currently 75% leased, housing PMI, Comtech TeleCommunication Systems and Stanley Thermos. According to Unico officials, the building was bought with the expectation that the Pike Place waterfront area is about to go through “a dramatic transformation,” and they are eager to integrate the property into this new waterfront.

OFFICE LEASES

Wright Runstad has said that construction will begin at the new Rainier Square development, after officially confirming that Amazon will be taking the entire office portion. The Amazon deal is the largest single lease in Wright Runstad history, and the skyscraper is the largest they have built. The mixed-use skyscraper will contain 200 luxury apartments and retail space in addition to the 722,000 square feet of office that Amazon will occupy.

While Amazon remains king in Seattle, Oracle is also boosting its presence in the Emerald City with a lease of 167,000 square feet at Russell Investments Center. In addition, Oracle is also taking 10,000 more square feet at Century Square, its current location. Oracle is seeking to broaden its cloud business, planning to hire over 5,000 engineers, sales and support people, in an effort to compete with Amazon and other cloud based companies.

The top six floors of Starwood Capital Group’s Macy’s building on Third and Pine have officially been leased by Amazon. The 475,000 square feet of office space will fill Amazon’s ever-growing space requirement in the downtown core while they wait for Rainier Square to open in 2020. This historic building once housed Macy’s on all seven floors, plus the basement, but the retailer has now shrunk to just the basement and ground floor.

Co-working company Thinkspace has leased 20,000 square feet in the Lake Union Building, hoping to open up space for tech startups next year. Thinkspace’s new location will include shared space, co-working, meeting rooms, event space, and even a lake view balcony overlooking Lake Union. The new office will do a soft opening in February or March of next year, and its theme is “grit and resilience,” fostering an environment where startups and entrepreneurs can push their limits and achieve their visions.

ECONOMY

Seattle remains the nation’s hottest real estate market, shattering yet another record this month and maintaining its title as the nation’s top market for an entire year. The rate of growth in home values rose 13.2% from last August, more than double the national rate of 6.1%. Seattle is now the fastest-growing big city in the country, adding 57 people a day on average to the swelling population. This influx of people hints at a tech company exodus from San Francisco, whose housing market is growing at half the rate of Seattle.

Despite the intense housing market, millennials are not “giving up” on buying a home. The Zillow Group Report states that up to 42% of people looking for a home are looking to buy their first. The typical news characterization of the forever-renter millennial is unfounded, as plenty millennials still see real estate as one of the most valuable investments they can make.

Home prices aren’t the only things that are rising in Seattle, however. Wage growth is also growing fast, and Seattle lead the country in growth for human resources, finance and food service jobs. Wages increased 2.1% from last October, and Seattle’s median base pay is $60,333 per year – though it lags behind San Francisco’s $68,023. More information on the fastest growing wages can be found here.

Aside from Seattle’s rising home prices and wages, the bustling restaurant scene here is facing a staffing crisis. With housing prices skyrocketing, many employees are moving further and further away from the city center, resulting in incredibly high rates of turnover for both front and back of house staff. Restaurateurs gathered at a panel hosted by Yelp to try and address these concerns, suggesting strategies to recruit and retain talent. Stronger leadership in the kitchen and the ability for employees to set more flexible work schedules were just two of many potential solutions to this daunting problem in the Seattle restaurant industry.

ARENA

The City of Seattle may be moving forward with their plans to partner with Oak View Group on the KeyArena renovation, but Chris Hansen’s group isn’t done yet. Hansen, who is trying to get a new area built in SoDo, has begun a campaign to make the KeyArena project public instead of private. This tactic, which had been used against Hansen in previous years, would delay the environmental-impact statement (EIS) and force the city to consider alternative sites. This could very likely push the city and Oak View Group over their deadline to complete the project in October 2020. While Hansen has claimed he does not intend to litigate against the KeyArena renovation, the stage is set for a potential legal challenge on the KeyArena project.

In addition to this potential legal battle, Chris Hansen’s land use lawyer, Jack McCullough, has challenged the city council’s assertion that the SoDo arena plan hasn’t been resubmitted due to Hansen’s failure to respond to transportation department emails. The city claims that emails were sent out last March and April, but nothing is mentioned on whether or not those emails were received, or to whom they were sent. It is estimated that it would take Hansen’s group and the transportation department three to four months to complete the required presentation to allow the SoDo project to move forward in attempts for approval.

Despite delays and deterrents, Hansen and his group continue to push for a SoDo area, going so far as to champion a two-arena setup with KeyArena downsizing to a concert venue, and the SoDo location hosting an NBA team. He plans to be “in it to the end” despite being the obvious underdog at the most recent city council hearing. Only time will tell whose plan will ultimately win approval, but both sides of the aisle are eager to court the return of an NBA franchise to Seattle.

OTHER NEWS

Construction began on Seattle iconic Space Needle, with architects Olson Kundig releasing a series of images highlighting the changes to the Needle’s restaurant and observation deck. One of the main highlights? A rotating restaurant full of glass: glass tables, glass chairs, and glass floors that showcase the jaw-and-stomach dropping 500-foot elevation. More photos can be seen here.

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